High Court refuses to grant stay on Trai decision to cut IUC

Lawyers present said the court refused interim relief to Airtel and Idea, who had challenged telecom regulator’s order, and asked them to file their replies by November 3.Devina Sengupta&Gulveen Aulakh | ET Bureau | September 30, 2017, 09:16 IST

The Bombay High Court on Friday refused to grant a stay on the telecom regulator’s decision to slash the interconnect usage charge (IUC) by 57% from next month, and set November 15 as the start of final hearing, dealing a setback to India’s older telcos while leaving new entrant Reliance Jio relieved.

Lawyers present said the court refused interim relief to Bharti Airtel and Idea Cellular, who had challenged telecom regulator’s order, and asked them to file their replies by November 3.

Bharti Airtel, Idea Cellular and Vodafone India, the country’s top three telcos serving nearly 60% of the user base, would from October 1get sharply lower IUC fees — which is paid to networks that receive calls from a network where the call originates. New entrant Jio, in turn, will need to pay significantly less given its nearly 11% subscriber market share.

Market leader Bharti Airtel and No.3 carrier Idea had moved the Bombay High Court on Thursday, seeking a stay on the Telecom Regulatory Authority of India’s (Trai) September 19 decision to reduce IUC to 6 paise a minute from 14 paise from October 1 and to scrap the charge from January 2020. The IUC case marks the start of another legal confrontation between telcos and the sector watchdog.

A person familiar with the matter said Mukesh Ambani-owned Jio is likely to have also filed a case in the same court, seeking the removal of the IUC, but this could not be independently verified. Idea Cellular, Bharti Airtel and Jio did not respond to emailed queries on the matter.

“Majority members are disappointed. They will now wait for the full court hearing to see how the court determines (the issue) on the merits of the case,” said Rajan Mathews, director general of Cellular Operators Association of India (COAI). The industry body represents all major telcos including top three Bharti Airtel, Vodafone India, Idea and new entrant Reliance Jio Infocomm. Jio though has backed Trai in its decision to slash IUC.

“It is a setback, but a small one. But the more important point is that the final hearing will start on November 15, and the telcos are hopeful of a quick decision on the matter,” said a senior executive at one of the top three telcos. He added that since IUC is between two operators, even if a lower amount is charged on account of the new Trai rule from October 1, it can be easily adjusted against future payments in case the court were to scrap the regulator’s rule at a later date.

“But the key is an early decision.” Anticipating telcos’ legal challenge, the regulator had last week filed caveats in 18 high courts across the country asking to be heard before any order is issued. The legal battle is the second instance of telecom operators contesting a Trai decision. The previous case was related to the regulator’s order to telcos to compensate users for call drops, which the Supreme Court scrapped.

The stakes are higher this time as companies including Airtel, Vodafone and Idea stand to lose a combined Rs 5,000 crore in revenue annually, while Jio, which started services a year ago, could gain about Rs 5,000 crore. That’s because Airtel, Vodafone and Idea have been net gainers under the current IUC system since they have nearly 60% of the subscribers and more calls terminating on their networks than originating from them.

Jio, which offers free voice services, has the most outgoing calls terminating on the networks of others. India’s top telcos are already locked in a price war with Jio that has hit their revenue and profit. They have also challenged Trai’s March 2015 decision to reduce the IUC to 14 paise a minute from 20 paise. The case is still pending.